Altaf Yunuf Shaikh Umbergam

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ITA No 2842/A/2012 & 1 197/A/2013
. A.Y. 2009-10

IN THE INCOME TAX APPELLATE TRIBUNAL ? A ? BENCH, AHMEDABAD

(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No. 2842/AHD/2012 & 197/AHD/2013
(Assessment Year: 2009-10)

Income- Tax Officer, Vs. Shri Altaf Yusuf Shaikh, Delhi
Vapi Ward-1, Vapi. Bhilad, Gulsan Nagar,
Umbergdaon, Valsad.

(Appellant) (Respondent)

Shri Altaf Yusuf Shaikh, Delhi Vs. Income- Tax Officer,
Bhilad, Gulsan Nagar, Vapi Ward-1, Vapi.
Umbergdaon, Valsad.
(Respondent)
(Appellant)

PAN: BHGPS 5188D

Appellant by : Shri O.P. Batheja, Sr. D.R.
Respondent by : Shri Rajesh M. Upadhyay A.R.

( )/ ORDER

Date of hearing : 16-07-2013
Date of Pronouncement : 31-07-2013

PER SHRI ANIL CHATURVEDI,A.M.

1. These two appeals, one filed by the Revenue and the other filed by the

Assessee are against the order of CIT(A), Valsad Gujarat dated 7.09.2012 for

A.Y. 2009-10.
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ITA No 2842/A/2012 & 2 197/A/2013
. A.Y. 2009-10

2. The facts as culled out from the order of lower authorities are as under;

3. Assessee is an individual engaged in the business of plying of heavy vehicles

on hire. Assessee filed his return of income for A.Y. 2009-10 on 23.07.2009

declaring total income at Rs. 3,04,167/-. The case was selected for scrutiny

and thereafter the assessment was framed under Section 143(3) vide order

dated 18.11.2011 and the total income was determined at Rs. 47,87,990/-.

Aggrieved by the order of Assessing Officer, Assessee carried the matter

before CIT(A). CIT(A) vide order dated 07.09.2012 granted partial relief to the

Assessee. Aggrieved by the aforesaid order of CIT(A) The Assessee and

Revenue both are in appeal before us.

We first take up Revenue?s appeal in ITA no. 2842/Ahd/2012

4. The grounds raised by the Revenue reads as under:

1. On the facts and circumstances of the case, and in law, the learned
CIT(A) has erred in restricting the addition from Rs.27,25,135/- to
Rs.15,97,126/- made on account of the undisclosed income.
2. On the facts and circumstances of the case, and in law, the learned
CIT(A) has erred in restricting the addition made on account of
disallowances of expenses from 7,85,288/-(25% of the expenses claimed
in P&L) to Rs.l,02,963/-(5% of the expenses of personal nature).
3. On the facts and circumstances of the case, and in law, the learned
CIT(A) has erred in deleting the addition made of Rs.9,73,396/- on
account of provisions of section 68 of the I T Act 1961.
4. On the facts and circumstances of the case and in law, the Id CIT(A) has
erred in considering the additional evidences without giving any
opportunity of being heard to the AO and thereby defied the provisions of
Rule 46A of the I T Rules 1962.

st
1 ground is with respect to addition made on account of undisclosed

income.

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ITA No 2842/A/2012 & 3 197/A/2013
. A.Y. 2009-10

5. During the course of assessment proceedings, as per AIR information

received by the Assessing Officer, he noticed that the Assessee has

deposited cash aggregating to Rs. 27,25,135/- (Rs. 14,07,176/- in ICICI Bank

and Rs. 13,17,959/- in DCB Bank) which was not disclosed in the books of

Assessee. Assessee was asked to show cause notice as to why the cash

deposits not be treated as undisclosed income. Since no reply was received

from the assessee. Assessing Officer treated the entire deposits of Rs.

27,25,135/- as income on an undisclosed sources. Aggrieved by the order of

Assessing Officer, Assessee carried the matter before CIT(A). CIT(A)

granted partial relief to the Assessee by holding as under:-

5.3 I have considered the observation of the Assessing Officer in the
assessment order as well as the contention raised by the AR of the
appellant in the written submission. The short issue here is the
appellant deposited certain amounts in two saving accounts in the
ICICI Bank Ltd. and DCB Bank Ltd. during the year which were not
disclosed in the R/I. The information was obtained by the Assessing
Officer through AIR information. During the assessment proceedings
the Assessing Officer called for the explanation from the appellant to
explain those deposits but as per Assessing Officer the appellant did
not furnish therefore, he made additions of those amount as
unexplained income of the appellant. The appellant’s contention above
is considered. The Id. AR tried to explain during the appellate
proceeding that to increase the turnover the appellant resorted to
withdrawing and depositing the same amount again and again. This
explanation,was not acceptable for the following reasons;
(i) First, the TO of the appellant during the year was Rs.37.49
lakh and the expenses was Rs. 34.45 lakhs resulted into a
profit of Rs, 3.04 lakh. In other words, the monthly inflow of
funds was Rs. 3.12 lakh (37.49 lakh/12 months) and outflow
was Rs.2.87 lakhs (34-45 lakh/12 months) leaving a surplus of
Rs. 25,000/- only and cannot be rotated again and again, This
is hand to mouth situation. There is no plausible explanation
why the appellant should withdraw from one account and
deoosit in another account.
(ii) ii) Second, on analysis of P&L a/c and B/S, the appellant had
cash available with him was Rs. 10.96 lakh (;.e. profit 4.04
lakhs + depreciation ?7.92 lakhs). At the same time there was
definite cash outflow in the form of loan repayments etc. are
as under;

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ITA No 2842/A/2012 & 4 197/A/2013
. A.Y. 2009-10

Paid to ICICI bank Rs. 4,89,274/ (monthly instalmments)
Car loan repayments Rs. 90,164/
Sriram Group Rs. 5,01,300/ (Truck Loan repayment)

Total Rs. 10,80,743/

Therefore, the balance available is megre amount of Rs. 16,000/-
which again cannot be used for rotation. How the appellant
manage household expenses etc. etc.?

iii) Third, let us examine the bank statements. The total Cash
Deposits at DCB Bank was Rs. 12,96,959/- and with ICICI Bank
was Rs..t3,96,376/-totaling to Rs.26,93.335/-. On perusal of bank
statements what was noticed is that there are some contra entries
in both the accounts. That means to meet the fund outflow the
appellant had affected inter transfer of some amounts from these
accounts. So be it. In that case the total amount available could not
be more than Rs. 10.96 lakhs (including depreciation) for this
purpose. In view of this kind and after considering the facts and
circumstances of the case, the unexplained cash deposits
considered as undisclosed income worked out at Rs. 15,97,126/-
(i.e. cash deposits Rs. 26,93,335- cash available at hand including
depreciation Rs. 10,96,209/-). Accordingly, the Assessing Officer is
directed to restrict the addition to Rs. 15,97,126/- and the appellant
gets part relief in this ground of appeal.

6. Aggrieved by the order of CIT(A) the Revenue is now in appeal before us.

7. Before us, at the outset the learned D.R. submitted that CIT(A) has

considered the additional evidence submitted before him by the Assessee

during the appellate proceedings. These additional evidences were neither

before Assessing Officer nor any report on the same was called by CIT(A).

Thus it was in violation of principle of natural justice and violation of Rule 46A.

He thus urged that the order of the Assessing Officer be upheld. The learned

A.R. on the other hand could not seriously controvert the submissions made

by D.R.

8. We have heard the rival submissions and perused the material on record.

From the order of CIT(A) it is revealed that the Assessee had furnished the
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ITA No 2842/A/2012 & 5 197/A/2013
. A.Y. 2009-10

copies of bank statement, statement of freight charges payable to Assessee

TDS deducted, source of deposits and cheques received by him. Before

CIT(A), it was also submitted that the deposits made in the bank account

were receipts from hire charges. CIT(A) has considered the aforesaid

documents and explanations submitted by the Assessee. He has not called

for any Remand Report from the Assessing Officer. Rule 46A(1) stipulates

the grounds on which the appellate authority can allow additional evidence.

Sub rule (2) provides that the appellate authority while admitting such

evidence must record its reasoning in writing. Sub rule (3) provides that no

evidence produced under sub rule(1) shall be taken into account unless the

Assessing Officer has been given a reasonable opportunity of examining the

evidence or documents produced or permitted to cross examine the

witnesses examined or permitted to produce any evidence or document in

rebuttal to the additional evidence produced by the appellant. In the present

case since CIT(A) has relied on additional evidence without giving an

opportunity to Assessing Officer to examine the same or rebut the additional

evidence we are of the view that there was violation of Rule 46A of I.T. Rules.

Considering the totality of facts we are of the view that to meet the ends of

justice, the matter be remanded to the file of Assessing Officer. We therefore

direct the Assessing Officer to decide the issue afresh as per law and after

considering the submissions of the Assessee and after giving a reasonable

opportunity of hearing to Assessee. We also direct the Assessee to co-

operate by submitting promptly the details called for by Assessing Officer.

Thus this ground of the Revenue is allowed for statistical purposes.

Ground no. 2 is with respect to restricting the disallowance of expenses to Rs.

1,02,963/-

9. During the course of assessment proceedings, Assessing Officer vide show

cause notice dated 09.11.2011 asked the Assessee to show as to why in the

absence of details and support of expenses 25% of the total expenses of Rs.
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ITA No 2842/A/2012 & 6 197/A/2013
. A.Y. 2009-10

31,41,155/- claimed not be disallowed. In the absence of any explanation or

evidence from the Assessee, Assessing Officer considered 25% of the

expenses amounting to Rs. 7,95,288/- as being unverifiable and added to the

income. Aggrieved by the order of Assessing Officer, Assessee carried the

matter before CIT(A). CIT(A) granted partial relief to the Assessee by holding

as under:

6.3 I have carefully considered the observation of the Assessing Officer in
the assessment order as well as the contention raised by the AR of the
appellant in the written submission. On careful perusal of nature of
expenditure indicates that some expenses are mandatory in nature and
allowable as per law for example Road Tax, Interest payments, Insurance
premium for the Truck insurances and Depreciation. There are few expenses
listed above which can be inflated. However, certain expenses such as Misc.
Expenses, Diesel Expenses and Telephone Expenses can have personal
ingredient. In the fairness and to meet end of justice a 5% of these expenses
mentioned here may be disallowed. Accordingly, the Assessing Officer is
directed to restrict the disallowance 5% of Misc. Expenses, Diesel Expenses,
and Telephone Expenses. This ground of appeal is partly allowed.

10. Aggrieved by the order of CIT(A) the Revenue is now in appeal before us.

11. Before us, the learned A.R. submitted that the Assessee did not file any

explanation with respect to the expenses before the Assessing Officer.

Assessee submitted certain details before CIT(A). CIT(A) did not call for any

remand report from Assessing Officer and decided the issue on the basis of

documents and other additional evidence submitted by the Assessee which is

in violation of Rule 46A. He thus urged that the order of the Assessing Officer

by upheld. The learned A.R. on the other hand could not controvert the

submissions made by the D.R.

12. We have heard the rival submissions and perused the material on record. We

find that before CIT(A), Assessee had filed copies of ledger details of various

expenses, copies of bills etc. These documents were not sent to Assessing

Officer for obtaining his comments. Further neither any Remand Report was

called from the Assessing Officer. CIT(A) has considered the aforesaid
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ITA No 2842/A/2012 & 7 197/A/2013
. A.Y. 2009-10

documents and explanations submitted by the Assessee. He has not called

for any Remand Report from the Assessing Officer. Rule 46A(1) stipulates

the grounds on which the appellate authority can allow additional evidence.

Sub rule (2) provides that the appellate authority while admitting such

evidence must record its reasoning in writing. Sub rule (3) provides that no

evidence produced under sub rule(1) shall be taken into account unless the

Assessing Officer has been given a reasonable opportunity of examining the

evidence or documents produced or permitted to cross examine the

witnesses examined or permitted to produce any evidence or document in

rebuttal to the additional evidence produced by the appellant. . In the present

case since CIT(A) has relied on additional evidence without giving an

opportunity to Assessing Officer to examine the same or rebut the additional

evidence we are of the view that there was violation of Rule 46A of I.T. Rules.

Considering the totality of facts we are of the view that to meet the ends of

justice, the matter be remanded to the file of Assessing Officer. We therefore

direct the Assessing Officer to decide the issue afresh as per law and after

considering the submissions of the Assessee and after giving a reasonable

opportunity of hearing to Assessee. We also direct the Assessee to co-

operate by submitting promptly the details called for by Assessing Officer.

Thus this ground of the Revenue is allowed for statistical purposes

Ground no. 3 is with respect to addition of Rs. 9,73,396/- u/s 68.

13. During the course of assessment proceedings, Assessing Officer noticed that

Assessee had shown unsecured loan aggregating Rs. 9,73,396/- but no

confirmation was filed by the Assessee. In the absence of any explanation or

evidence, Assessing Officer treated the unsecured loan as cash credit within

the meaning of section 68 and added to the income. Aggrieved by the order

of Assessing Officer, Assessee carried the matter before CIT(A). Before

CIT(A) it was submitted that the secured loan were taken for the purchase of

trucks and the loan was received in the earlier years. The balance appearing
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ITA No 2842/A/2012 & 8 197/A/2013
. A.Y. 2009-10

in the balance sheet in the books of accounts was opening balance brought

forward from earlier years. CIT(A) after considering the submissions made by

the Assessee granted partial relief by holding as under:

7.3 I have considered the observation of the Assessing Officer in the
assessment order as well as the contention raised by the AR of the appellant
in the written submission carefully. There is a force in the arguments of the
ld. A.R. The credit balances are from the lenders for purchases of trucks
which are the core of his business activities. The ld. A.R. also submitted
credible evidences in establishing its contention. In this circumstances, I am
inclined to agree with the ld. A.R. Therefore, the Assessing Officer is directed
to delete the addition made in this ground. The appellant?s gets relief in this
ground.

14. Aggrieved by the order of CIT(A) the Revenue is now in appeal before us.

15. Before us, the learned D.R. relied on the order of Assessing Officer. The

learned A.R. on the other hand submitted that the Assessee had obtained

vehicle loan from Sri Ram Group of Finance in earlier years. During the year

under consideration, no fresh loan was received by the Assessee but on the

contrary the Assessee had repaid the portion of the loan and the closing

balance on 31/03/2009 was Rs. 9,73,396/-. In support of his contention, he

placed on record at page 50 of the paper book, the copy of the ledger account

of Sri Ram Group appearing in his books of account. He thus submitted that

since no new loan has been received by the assessee, no addition can be

made under Section 68.

16. We have heard the rival submissions and perused the material on record.

From the copy of the ledger account placed in the paper book. It is seen that

the opening balance as on 1.04.2008 that was payable by the Assessee to Sri

Ram Group of Finance was Rs. 13,33,396/- and the closing balance as on

31.03.2009, after the application of interest was Rs. 9,73,396/-. During the

year, assessee had also repaid loans. The ledger account also reveals that

the Assessee has not received any fresh loan during the year . Thus the

balance of loan at the close of year is the amount outstanding which was
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ITA No 2842/A/2012 & 9 197/A/2013
. A.Y. 2009-10

brought forward from earlier years. The carried forward amount of the

previous year does not become an investment of cash credit generated

during the year under consideration. In view of the aforesaid facts, we find no

reason to interfere with the order of CIT(A) and thus this ground of Revenue

is dismissed.

17. In the result the appeal of the Revenue is partly allowed.

We now take up Assessee?s appeal in ITA No. 197/Ahd/ 2013.

18. Before us, at the outset it was submitted that there was delay of about 14

days in filing the appeal. The Assessee has filed an affidavit requesting for

condonation of delay. The affidavits reads as under:-

I, Altaf Usuf Shaikh, adult by age, occupation business and residing at

Gulshan Nagar, “Delhi Bhilad, Umbergaon, take oath and affirm as under:

2. That an appeal order of Hon’ble CIT (A), Valsad was served upon me on
07/11/2012 and therefore second appeal is required to be filed on or before
06/01/2013, which was holiday on account of Sunday. So, appeal is
required to be filed on 07/01/2013.
That said appeal was posted by speed post on 19/01/2013, by my AR at
Valsad and the same was received by the registry on 21/01/2013. Thus,
there is a delay of about -14- days in filing of an appeal.
3. That in the month of January 2013, I was sick and subsequently was
admitted in hospital from 06/01/2013 to 09/01/2013. Thereafter, I was
advised to take rest for further-10-days.
4. Under the circumstances, I could not contact my AR Shri B.H. Shastri at
Valsad in connection with filing of an appeal before the Hon’ble ITAT,
Ahmedabad.
5. As soon as I got well, on 17/01/2013 I approached Shri B.H. Shastri at
Valsad, who immediately prepared my appeal and issued me a challan of
Rs. 10,000/-being ITAT appeal fees. I made payment of the said fees on
18/01/2013 at SBI, Vapi. I handed over the said challan and also signed
appeal memo etc. on 19/01/2013 and on the every same day, the appeal
was posted through speed post from Valsad city itself.
Whatever stated hereinabove, in this affidavit, is true and correct to the best
of my knowledge and belief. I am aware of the fact that execution of false
affidavit amounts to an offence under IPC. The said affidavit is executed in
order to file before Hon’ble ITAT, Ahmedabad for condonation of delay for –
14- days, in filing of second appeal for A.Y. 2009-10.
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ITA No 2842/A/2012 & 10 197/A/2013
. A.Y. 2009-10

19. After considering the contents of the affidavit we find that there was

reasonable cause for delay. We thus condone the delay.

20. The grounds raised by the Assessee reads as under:-

1. ITO has erred in law and on facts in making addition of Rs. 27,25,135/- for amounts deposited of
Rs. 14,07,176/- and Rs. 13,17,959/- on various dates during year under appeal in ICICI Bank Ltd.
and DCB Bank respectively learned CIT(A) Valsad sustained addition of Rs. 15,97,126/- on the
incorrect basis.
2. ITO has erred in law and on facts to disallow 25% of total expenses claimed, on adhoc basis,
resulting in addition of Rs. 7,85,255/- Learned CIT(A) Valsad has also erred to direct ITO to
disallow 5% of Misc. expenses, Diesel expenses and Telephone expenses on presumption,
assumption, estimation and also on adhoc basis.
21. The issue raised in the present ground no. 1 and 2 are connected with

Ground no. 1 and 2 of Revenue?s appeal and since Ground no. 1 and 2 of

Revenue?s appeal have been remitted to the file of Assessing Officer for

deciding it afresh, We for reasons stated while disposing of ground no. 1 and

2 of ITA No. 2842/Ahd/2012also remit both the grounds to the file of

Assessing Officer for deciding it afresh. Thus this appeal of the Assessee is

allowed for statistical purposes.

22. In the result the appeal of the Revenue and Assessee are allowed for

statistical purposes.

Order pronounced in Open Court on 31- 07- 2013.

Sd/- Sd/-

(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad. TRUE COPY

Rajesh
Copy of the Order forwarded to: –
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) ?
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER

Deputy/Asstt.Registrar
ITAT,Ahmedaba

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